A
- Add-on
- An acquisition completed by an existing private-equity-backed platform business. The platform is the initial acquisition; add-ons are subsequent acquisitions that bolt onto the platform. Common in healthcare, HVAC, dental, and franchise roll-ups.
- APA Asset Purchase Agreement
- The contract by which a buyer acquires specific assets of a business rather than the equity of the entity. Most NJ small business sales below $5M are structured as asset purchases for tax and liability reasons. Excludes the entity's tax history, certain liabilities, and legacy contracts unless explicitly assumed.
- Article 28
- A NY State Department of Health-licensed Diagnostic & Treatment Center (D&TC) under Article 28 of NY Public Health Law. Categories include multi-specialty primary care clinics, ASCs, ESRD dialysis facilities, imaging centers, fertility centers, methadone clinics, and Article 28 dental clinics. Sale requires a PHHPC Certificate of Need.
- Article 31 (MHOTRS)
- A NY State Office of Mental Health-licensed outpatient mental health program under Article 31 of NY Mental Hygiene Law. Rebranded to MHOTRS (Mental Health Outpatient Treatment and Rehabilitative Services) in 2022 under updated 14 NYCRR Part 599 regulations. Includes outpatient psychiatry, ACT teams, PROS programs, and CPEP.
- ASC Ambulatory Surgery Center
- A freestanding facility licensed to perform same-day surgical procedures. In NY, ASCs are licensed under Article 28. Typical 2026 ASC platform multiples: 8×–11× EBITDA.
B
- BizBuySell
- The largest U.S. online business-for-sale listing marketplace, owned by CoStar Group. Publishes the quarterly BizBuySell Insight Report tracking national small business transaction data, multiples, and market trends.
- Bring-down
- Pre-closing confirmation that the seller's representations and warranties remain true as of the closing date. Standard provision in definitive agreements.
- Business broker
- A licensed intermediary who facilitates the sale of a small or mid-market business. Handles confidential marketing, buyer qualification, negotiation, due diligence coordination, financing coordination, and closing. NJ does not require a separate business broker license but most operate under real estate broker or M&A advisor credentials.
C
- Carve-out
- A specific asset or business line excluded from the transaction. Common carve-outs: real estate, related-party contracts, personal vehicles, intellectual property unrelated to the business.
- CCBHC Certified Community Behavioral Health Clinic
- Federal SAMHSA certification that increases Medicaid reimbursement rates for qualifying behavioral health programs. CCBHC status lifts NJ/NY Article 31 multiples by 1–2 turns.
- CIM Confidential Information Memorandum
- The marketing document prepared by a broker describing a business for sale. Distributed only after a buyer signs an NDA. Typically 20–60 pages, includes financial summaries, operations overview, market positioning, and growth opportunities.
- Co-broker
- An arrangement where a buyer's broker brings the buyer to a sell-side broker's listing. The success fee is typically split 50/50 between the two brokers. Sellers should always confirm a broker is willing to co-broker before signing engagement — a "no" significantly limits the buyer pool.
- CMS Centers for Medicare & Medicaid Services
- The federal agency that administers Medicare and Medicaid. Sets provider enrollment requirements and reimbursement rates for healthcare entities.
- CON Certificate of Need
- The regulatory approval required by NY PHHPC for Article 28 D&TC ownership transfers, new facilities, or service expansions. Application includes character & competence review of every 10%+ owner. Approval timeline: 4–9 months.
- CPOM Corporate Practice of Medicine
- The legal doctrine that restricts non-physician ownership of medical practices. NY has one of the strictest CPOM doctrines in the U.S. PE healthcare investments use MSO/Friendly-PC structures to comply with CPOM.
- CPEP Comprehensive Psychiatric Emergency Program
- A NY OMH-licensed crisis psychiatry service category. Hospital-based 24/7 emergency psychiatric care.
- Customer concentration
- The percentage of revenue from the top 1, 5, or 10 customers. Above 25% from a single customer is a meaningful valuation compressor (typically 0.5–1 turn).
D
- D&TC Diagnostic & Treatment Center
- The official Article 28 facility designation in NY. Used interchangeably with "Article 28 clinic."
- DSO Dental Service Organization
- The MSO equivalent in dental M&A. Aggregates dental practices under a single management platform while preserving doctor-owned PCs to satisfy state ownership requirements.
- DIR Direct and Indirect Remuneration
- Post-point-of-sale fees clawed back by PBMs (CVS Caremark, Express Scripts, OptumRx) from pharmacies. Historically 3–7% of pharmacy revenue. Reformed to point-of-sale effective 2024 under CMS final rule.
- Double Lehman
- A sliding-scale broker commission: 10% on first $1M, 8% on next $1M, 6% on next $1M, 4% on next $1M, 2% on everything above $4M of transaction value.
- Due diligence
- The buyer's investigation of the seller's business before closing. Typically 4–10 weeks, covers financial, operational, legal, environmental, IT, and regulatory. Includes the Quality of Earnings (QofE) report.
E
- Earnout
- Conditional consideration paid to the seller based on post-close performance metrics (revenue, EBITDA, patient retention, customer retention). Common in healthcare and recurring-revenue businesses. Typically 10–30% of total consideration over 2–3 years.
- EBITDA Earnings Before Interest, Taxes, Depreciation, Amortization
- The standard profitability measure for businesses with replaceable management or revenue above $3M. Does NOT add back owner compensation (use SDE for owner-operator businesses). Normalized EBITDA also adds back non-recurring items and accounting one-offs.
- eMedNY
- NY State Medicaid provider enrollment system. Healthcare ownership transfers require eMedNY re-papering. Timeline: 60–120 days.
- Escalator fee
- A bonus commission paid to the broker when the sale price exceeds a defined target. Common structure: 20% bonus commission on every dollar above the listing price. Used to align broker incentives with seller's price maximization.
- Escrow
- Portion of purchase price held by a third party (typically 5–15% of EV) for 12–24 months post-close to cover potential indemnification claims under reps & warranties.
- ESRD End-Stage Renal Disease
- Kidney failure requiring dialysis or transplant. ESRD dialysis facilities are an Article 28 sub-category in NY. Notable: ESRD facilities have a narrow exception to NY CPOM, allowing non-physician corporate ownership.
- EV Enterprise Value
- The total transaction value including assumed debt, retained cash, and working capital adjustments. EV is the most commonly cited "deal size" metric. Distinct from equity value or purchase price.
F
- FQHC Federally Qualified Health Center
- HRSA-designated community health centers that receive federal grants and 340B drug pricing. FQHC affiliations are highly valued in healthcare M&A.
- Friendly-PC
- A professional corporation owned by a physician who has agreed to operate the practice under a Management Services Agreement with an MSO. Standard structure for PE healthcare investments in CPOM states.
G
- GER Generic Effective Rate
- Contractual rate at which a PBM reimburses pharmacies for generic prescriptions. GER pressure is a leading cause of pharmacy margin compression.
- Goodwill
- The portion of purchase price exceeding the value of identifiable tangible and intangible assets. Allocated for tax purposes. SBA 7(a) limits the goodwill portion that can be financed in some structures.
H
- Hold-back
- Portion of purchase price withheld by the buyer until a defined post-close milestone is achieved (e.g., key employee retention, license transfer). Distinct from escrow.
I
- IBBA International Business Brokers Association
- The trade organization for U.S. business brokers. Publishes the quarterly Q-Market Pulse Report, the most-cited industry data source on small business multiples and time-to-close.
- Indemnification
- Contractual obligation of one party to compensate the other for losses arising from breach of representations & warranties or specific identified risks. Typically capped at 10–20% of EV.
L
- Lehman formula
- Sliding-scale broker commission: 5% on first $1M, 4% on next $1M, 3% on next $1M, 2% on next $1M, 1% on everything above $4M of transaction value.
- LOI Letter of Intent
- Non-binding (mostly) preliminary agreement on price, structure, exclusivity, and key terms. Triggers the diligence period (typically 60–90 days exclusivity). Certain provisions like exclusivity and confidentiality are usually binding.
- LTC pharmacy Long-Term-Care pharmacy
- A pharmacy serving nursing homes, assisted living, and group homes with institutional dispensing contracts. Trades at a 60–70% premium over equivalent retail pharmacy file volume.
- LTM Last Twelve Months
- Same as TTM. The financial period covering the most recent 12 completed months.
M
- M&A Source
- The trade organization for U.S. middle-market M&A advisors. Higher deal-size focus than IBBA.
- Material Transaction Notice
- NY Public Health Law Article 45-A filing required for healthcare deals adding $25M+ to NY in-state revenue. 30-day prior notice with public posting and NY Attorney General notification.
- MHOTRS Mental Health Outpatient Treatment and Rehabilitative Services
- The 2022 rebrand of "Article 31 Clinic" under updated 14 NYCRR Part 599 regulations. See Article 31.
- MSA Management Services Agreement
- The long-term contract (typically 15–40 years) between an MSO and the licensed PC in a friendly-PC structure. Captures economic value while preserving CPOM compliance.
- MSO Management Services Organization
- The non-clinical operating entity in a friendly-PC structure. Provides management services, billing, technology, marketing, HR, and real estate. Holds the economic value of the practice.
N
- NDA Non-Disclosure Agreement
- Signed by prospective buyers before they receive the CIM or any specific business identification. Protects the seller's confidentiality during the marketing process.
- NJ ABC New Jersey Division of Alcoholic Beverage Control
- NJ regulator that reviews liquor license transfers. PRC (on-premise) and PRD (off-premise) license transfers require ABC approval. Timeline: 10–16 weeks plus municipal council approval.
- Normalization
- The process of adjusting reported financials to compute the SDE or EBITDA a typical buyer would inherit. Adds back owner expenses, removes non-recurring items, restates revenue recognition where needed.
O
- OASAS NY Office of Addiction Services & Supports
- NY State regulator that licenses Article 32 substance use disorder programs. Many Article 31 mental health clinics also hold Article 32 dual licensure for co-occurring disorder treatment.
- OMH NY Office of Mental Health
- NY State regulator that licenses Article 31 / MHOTRS mental health programs. Reviews ownership transfers via character & competence review.
- Owner add-back
- Personal owner expenses run through the business P&L that should be added back to compute normalized SDE/EBITDA. Common examples: owner salary above market, spouse salary above market, personal auto, personal travel, personal phone, personal meals, family member salaries above market.
P
- PBM Pharmacy Benefit Manager
- Insurance intermediary that negotiates prescription drug coverage on behalf of payers. CVS Caremark, Express Scripts, OptumRx control over 80% of U.S. PBM market.
- PC Professional Corporation
- The licensed entity that holds medical/dental/professional licenses. Required for physician-owned practice operations in CPOM states.
- PE platform
- Private equity-backed business used as an aggregation vehicle for acquiring similar businesses (the "roll-up" strategy). Common in healthcare, HVAC, dental, plumbing, behavioral health.
- PECOS Provider Enrollment, Chain, and Ownership System
- CMS database for Medicare provider enrollment. Healthcare ownership transfers require PECOS re-papering. Timeline: 30–90 days.
- PHHPC Public Health and Health Planning Council
- NY DOH regulatory body that reviews Article 28 transactions and approves Certificates of Need. Recommendations come from the Establishment & Project Review Committee (EPRC).
- PHL Article 45-A
- NY Public Health Law Article 45-A. The Material Transactions filing requirement for healthcare deals adding $25M+ to NY in-state revenue.
- PRC license Plenary Retail Consumption license
- The NJ on-premise restaurant/bar liquor license, capped at 1 per 3,000 residents per municipality. Trade values range $50K–$1.5M+ depending on town.
- PRD license Plenary Retail Distribution license
- The NJ off-premise liquor store license.
- PROS Personalized Recovery-Oriented Services
- An Article 31 MHOTRS service category in NY focused on community-based mental health recovery.
- Project Equity
- Nonprofit organization that tracks the demographic data on baby boomer business owner transitions. Primary source for "Silver Tsunami" research showing 2.34M U.S. small businesses with $1M+ revenue owned by people 55+.
Q
- QofE Quality of Earnings
- A third-party financial analysis that normalizes EBITDA and identifies one-time items, owner add-backs, and revenue recognition issues. Typically prepared during buyer diligence by specialist accounting firms (BakerTilly, EisnerAmper, MGO, etc.). Cost: $20K–$75K depending on deal complexity.
R
- Reps & warranties
- Statements made by the seller in the purchase agreement about the business condition, financials, legal status, contracts, employee matters, environmental compliance, etc. Backed by indemnification provisions and increasingly by R&W insurance.
- R&W insurance
- Representations and Warranties insurance. Covers buyer indemnification claims from the insurer rather than seller escrow. Increasingly standard above $5M EV. Cost: 3–5% of policy limit.
- Recurring revenue
- Revenue from subscriptions, memberships, maintenance contracts, retainer agreements, or other contractually predictable streams. Heavily valued by acquirers; can lift multiples 1–1.5 turns.
- Rollover equity
- Portion of sale proceeds rolled into the buyer's entity (MSO or operating company). Common in PE healthcare deals at 20–40% of total consideration. Provides seller continued upside if the buyer grows the platform.
- Roll-up
- An acquisition strategy that aggregates multiple small businesses in the same industry under a single platform to achieve scale, operational leverage, and exit multiples 2–3 turns higher than the inputs.
- Run-rate
- Annualized projection based on recent (typically 3–6 month) performance. Used when most-recent performance is materially different from historical.
S
- Sale-leaseback
- Owner sells the real estate to a real estate investor and leases it back to the operating business. Common when selling a business with attached owner-owned real estate. Allows seller to capture both operating-business value and real estate value separately.
- SBA 7(a)
- The Small Business Administration 7(a) loan program. Federal acquisition financing for small business purchases up to $5M. Down payment 10–15% (5% with seller-note participation), term 10 years for goodwill/equipment or 25 years for real estate, rate Prime + 2–3%, approval 60–150 days.
- SBA 504
- SBA loan program for real estate and major fixed assets. Often paired with 7(a) when buying real estate alongside a business.
- SDE Seller's Discretionary Earnings
- Net income + owner compensation + owner-related personal expenses + interest + taxes + depreciation + amortization + non-recurring items. Used for owner-operator businesses under $3M revenue where the owner draws meaningful compensation.
- Seller note
- Seller-financed promissory note included in the purchase price. Common structure: 10–20% of EV as a seller note at 5–8% interest, 5–10 year term. Reduces buyer's cash requirement and signals seller confidence in the business.
- Silver Tsunami
- The demographic wave of baby boomer business owners transitioning ownership over the 2025–2035 decade. Approximately 2.34M U.S. small businesses with $1M+ revenue owned by people 55+ (Project Equity 2024).
- SPA Stock Purchase Agreement
- The contract by which a buyer acquires the equity of an entity rather than specific assets. Used when the business has valuable contracts, licenses, or tax attributes that don't transfer cleanly in an asset sale.
T
- Tail period
- Post-engagement period during which the broker is still entitled to commission if a contact they introduced ultimately closes the transaction. Typically 12–24 months.
- TTM Trailing Twelve Months
- The financial period covering the most recent 12 completed months. Standard reference for normalized financial analysis.
- Turn (of a multiple)
- An incremental 1.0× on the multiple. Saying "lifts the multiple 1 turn" means moving from, e.g., 5.0× to 6.0× EBITDA.
U
- USP 797 / 800
- U.S. Pharmacopeia chapters governing compounded sterile preparations (797) and hazardous drugs (800). Compliance is required for specialty/compounding pharmacies and increases their valuation premium.
V
- Vertical
- Industry or sector category (e.g., HVAC vertical, pharmacy vertical, dental vertical). PE roll-up strategies are typically organized by vertical.
W
- Working capital adjustment
- Post-close true-up of normalized working capital vs. the working capital target set at LOI. Can shift purchase price by 5–10% in either direction. Computed using the closing balance sheet.
Use this glossary: Published under CC BY 4.0. Quote, adapt, or redistribute with attribution to "Nexus Bridge Business Brokers" or "Steven Reese, Nexus Bridge Business Brokers, https://nexusbridgebrokers.com." Last verified: May 7, 2026.